Trends & Insights

  • Trends in nonqualified deferred compensation plans

    Group of people talking about trends in nonqualified deferred compensation plans.

    An effective benefit in the race for top talent

    Nonqualified deferred compensation plans continue to be an effective benefit. Read what employers and key employees have to say about it.

    The report from Principal® (research conducted in 2016 and published in 2017) points out key trends in the deferred comp market. It also provides an inside look at what plan sponsors and participants like most about the plan and why it’s important to them. A presentation of the findings is also available. 

    Take their word for it – key takeaways

    Deferred comp is key for retirement savings

    • Employers want to help their top talent save beyond qualified-plan limits. 
    • Key employees expect plan benefits to represent part of their retirement income. 

    Deferred comp helps recruit, reward and retain

    • Key employees consider this benefit important in deciding to take a new job or stay with a current employer.
    • Most employers are concerned about losing key employees to competitors – this plan adds value to their benefits package. 

    Deferred comp provides flexibility and choice

    • Employers want plans that are simple and cost efficient. 
    • Key employees determine their deferral amounts based on savings goals, tax rates and current income needs.
    Read the latest research

    Get an inside look at employers’ and key employees’ viewpoints and experiences with a deferred comp plan. 

  • Interest rates: Set to go up

    On Dec. 14, 2016, the Federal Reserve increased the federal funds rate by 0.25 percent, which will likely influence other interest rates.

    Why the rate hike?

    The Fed uses interest rates to help guide employment growth and stabilize the economy.

    For example, if the economy is growing slowly, they may lower interest rates to encourage increased spending and investing. On the other hand, if the economy is growing quickly, which could increase inflation, they might raise rates to cool it down.

    The Fed raised the federal funds rate in December 2015 for the first time since 2006. We expected it could increase several more times in 2016, but it didn’t, based on employment, inflation and other economic factors. Heading into the Dec. 14 decision, all signs pointed to a slight hike.

    With an increase, we could see some market volatility

    When interest rates rise, several things generally happen:

    • Short-term swings occur in the markets as they adjust to the new rates.
    • Bond prices typically go down.

    The impact, if any, to your company's retirement plan will likely be limited. However, your participants may have concerns with any market volatility.

    Be prepared for questions

    This online article or this paper version (PDF) can help your participants understand interest rates and help them keep their long-term goals in mind.

    You can learn more about the global economy through expert perspective from Principal Global Investors.

    For more information or help answering participant questions, contact your financial professional or Principal® representative.

  • A generation with income to protect

    Generational differences exist in most of today’s workplaces. With at least three generations working side-by-side – baby boomers, Generation Xers and millennials – meeting diverse employee benefit needs can be a challenge for employers.

    Conversations about how to reach millennials – and even baby boomers as they retire and exit the workforce – are common, but information about connecting with Generation X is harder to come by.

    Until 2015, Gen Xers made up the largest share of employees in the country’s workforce.1 While their numbers are now lower than millennials, their benefit needs persist … and those needs are unique.1 They’ve been in the workforce for decades, which means most have accumulated assets and are building a legacy they need to protect now for future generations.

    Today’s Gen Xers have plenty of financial commitments on their plates. They’re parents and partners, homeowners and business owners. Many have a growing responsibility for their own aging parents. And without a way to protect their income, a disability could a cause devastating blow to their financial present and future.

    A Generation with Income to Protect – a Benefits Quarterly article by Amy Friedrich, senior vice president, Specialty Benefits Division, Principal® – describes how offering income protection to Generation Xers not only helps them deal with today’s expenses and prepare for the future, but also can help employers meet business objectives such as attracting and retaining top talent.

    Download the full article to learn more about the unique benefit needs of Gen Xers and how to meet them.

    Ready to talk about how to meet generational benefit needs? Contact your financial professional or Principal representative today.

  • DOL regulation expands the definition of “fiduciary”


    On April 6, the Department of Labor (DOL) released its final fiduciary definition regulation package. More than 900 pages later, we’re getting a better sense of what was (and wasn’t) included.

    Initial thoughts on the DOL "fiduciary" definition

    The regulation itself broadens who is considered a fiduciary.

    You’ll find the highlights in the latest Compliance News.

    There’s much more to come, but this will help you start understanding some of the key elements of the package. 

    What’s next?

    You’ll need to know how the regulation may impact you and your plan, and any individuals who service your plan, including your financial professional and your service provider.

    Our business leaders and legal team are continuing to analyze the details now. We’re working with leading ERISA counsel and other industry experts to understand the regulation and impacts so we can give you accurate analysis. 

    Look for periodic updates on principal.com Employers Trends & Insights as the regulation review continues. 

    Adapting to change

    Principal® has a long and successful history of responding and adapting to significant regulatory changes, and helping you do the same. The new DOL regulation is no exception.

    With a strong history of expertise and leadership, we are prepared to continue to help you meet your retirement plan goals in an ever-changing market.  

  • DOL releases final fiduciary regulation

     

    Have you been waiting for the final Department of Labor (DOL) regulation on the definition of "fiduciary"? Now that it’s here, we’ll help you understand what’s included.

    The package of materials includes:

    • A regulation that fundamentally redefines who could be considered a “fiduciary” by reason of providing investment advice to a plan or an IRA.
    • New Prohibited Transaction Exemptions (PTEs)
    • Amendments to a number of existing PTEs

    The final package is effective 60 days after publication in the Federal Register with an applicability date of April 10, 2017.

    Ongoing, accurate analysis

    You’ll need to know how the regulation may impact you and your plan, and any individuals who service your plan, including your financial professional and employees of Principal®.

    Our business leaders and legal team are reviewing the details now. We’re working with leading ERISA counsel and other industry experts to understand the regulation and impacts so we can give you accurate analysis and suggestions for next steps.

    We’ll send you a high-level overview next week. Also, look for updates on the principal.com Employers Trends & Insights page.

    Adapting to change

    Principal has a long and successful history of responding and adapting to significant regulatory changes, and helping you do the same. The new DOL regulation is no exception.

    With a strong history of expertise and leadership, we are prepared to continue to help you meet your retirement plan goals in an ever-changing market.  

    What you can expect

    Look for periodic updates on the principal.com Employers Trends & Insights page as the regulation review continues. In the weeks ahead, tools and resources will be available to help you assess the impact this regulation may have for your retirement plan. 

  • Two ways to help your employees understand volatile markets

    In the U.S. and around the world, investors are a bit uneasy in the face of falling stock prices. The drop in U.S. markets correlates with:  

    • Sinking oil prices. The Standard &Poor’s 500 has declined in line with the price of crude oil.1 
    • Turmoil in the Chinese economy and slumps in other global markets. Major European indexes — counterparts to the S&P 500 and Dow — were down 20 percent in January, slipping into bear market territory.

    What about the recent interest rate increase?

    In mid-December, showing confidence in the U.S. economy, the Federal Reserve raised short-term interest rates by 0.25 percent and forecast further increases in 2016. Because interest rate hikes can also cause market volatility, the January declines could have an impact on timing and number of additional rate increases this year.

    It’s important to remember, however, the economic strength indicators that led to the rate increase and keep a broader perspective on this period of volatility.

    Help educate your retirement plan participants

    Naturally, your retirement plan participants will have questions and concerns. Here are two ways you can help:  

    • Invite them to attend a live webcast on Monday, February 29 at 11 a.m. CT for instant insight and information. They can register online, and a replay will be available.
    • Share Coping with Market Volatility (PDF) (also available in Spanish), which details steps they can take to help minimize volatility’s impact on their retirement.

    Boost your own knowledge  

    Expert perspective (PDF) from Jim McCaughan, CEO, Principal Global Investors, can help you understand technical factors he sees behind the recent volatility and fundamental factors that could impact the long-term outlook for asset markets.

    Remember, in times of decline and volatility, it’s important to not let short-term volatility derail solid long-term investment planning.

    For more information or help answering participant questions, contact your financial professional or representative of the Principal Financial Group®.

Differentiate your company

Financial Tips for Businesses provides free tools and resources to help enhance your benefits program.

Fiduciary Regulation FAQs

We're here to help you navigate the changes ahead from the Department of Labor's fiduciary regulation. That's why we've answered some frequently asked questions about the regulation.